QUICK NEWS, 3-24: COAL UP, SUN DOWN, FIGHT ON; COAL NOW UNAFFORDABLE; BIG WIND FUNDED; THE BETTER PLACE BET

COAL UP, SUN DOWN, FIGHT ON
Coal Beats Solar as Analysts Favor Peabody Energy
Christopher Martin and Jeremy van Loon, March 17, 2010 (Bloomberg News)

"Wall Street’s contribution to the debate on how to curb global warming: Buy coal, sell solar.

"Peabody Energy Corp., the biggest coal producer, is rated a “buy” by 79 percent of analysts, while 44 percent recommend First Solar Inc., the largest maker of thin-film solar panels. The Stowe Global Coal index of 38 coal producers has gained 6.5 percent in 2010, and the Bloomberg Global Leaders Solar index of 38 solar module and component makers has dropped 17 percent."

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"While investors including T. Boone Pickens and Warren Buffett are pushing cash into green technologies, the tilt toward Peabody and away from First Solar is the widest in two years. It reflects a sense that government support for reducing air pollution may be waning…Solar companies’ profitability is falling because of competition from China and cuts to state support in Germany and Spain, where about 72 percent power-producing photovoltaic panels were installed in 2008 [and panel prices are expected to fall as much as 10 percent in 2010 after dropping 30 percent in 2009].

"Peabody has rallied 9.6 percent since Feb. 12, when the benchmark coal price was $49 a ton, its lowest for 2010. First Solar is little changed. Coal is burned to make about 41 percent of power worldwide and will increase its share to 44 percent by 2030, the International Energy Agency forecast…"

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"Even with growth predicted for coal-fired power generation, global investment this year in all forms of renewable energy, including wind and biomass, will climb to between $175 billion and $200 billion from $162 billion last year…With economies in Europe and the U.S. coming out of recession, attention has focused on the costs of renewable energy. The price in the U.S. of a kilowatt-hour of power from renewable sources, enough to run a toaster for 60 minutes, is about 20 to 25 U.S. cents…[One coal] company’s cheapest coal plant makes power for 2.7 cents a kilowatt-hour [but building new coal plants is more expensive than building new solar or wind capacity]…

"Even with coal demand rising, solar photovoltaic panel sales will climb this year…Germany may install 3,000 megawatts, or about a third of the world’s total…In the Czech Republic, a country of 10 million people, about 900 megawatts of solar power will be deployed, almost matching existing U.S. installations…[R]ising global demand will help some companies weather the slump in panel prices…"


COAL NOW UNAFFORDABLE
IGCC power plant project costs top $5,500/kW
19 March 2010 (Power-Gen Worldwide)

"Mississippi Power Co…proposed capping the cost of its proposed 582 MW Kemper County integrated gasification combined cycle (IGCC) coal-fired power plant at $3.2 billion, or almost $5,500/kW. The cap would be around 30 percent higher than the current estimate of $2.4 billion, or $4,123/kW, for the coal-fired power plant.

"…Tenaska [recently] said its planned 602 MW Taylorville coal to gas-fired power plant would cost about $3.5 billion and enter service in 2014. The estimated cost for that power plant is around $5,800/kW."

That's $5.5 nillion per megawatt. Wind is $1.5-to-$2.5 million per megawatt. Building twice as much wind saves half a million dollars, leaving aside externalities. How could any bank justify financing coal? How can any honest person ever say cheap and abundant about coal? What's cheap and abundant is wind. (click to enlarge)

"Mississippi Power executives last month told state regulators the company could guarantee neither the cost nor performance of the coal-fired Kemper County IGCC facility without risking the company's future credit rating and access to capital…The facility is being designed to burn Mississippi lignite. State regulators are weighing the risk and rate impact of building the coal project versus buying power under long-term contracts from existing generating plants that burn natural gas. The three-member commission is expected to issue a decision in early May…

"Tenaska said its proposed Taylorville Energy Center will use Siemens integrated gasification combined cycle technology to convert coal into a synthetic natural gas and then burn the gas to generate electricity. The conversion process would also separate pollutants such as sulfur dioxide, mercury and nitrogen oxide."

Maybe those investors in the preceding story will want to consider investing in energy instead of PR. (click to enlarge)

"The power plant design uses carbon capture and storage (CCS) technology and would capture more than half of the greenhouse gases produced. Tenaska said the plant’s emissions would be comparable to a natural gas-fired plant of similar size.

"Tenaska based its cost estimates on construction starting in December 2010, with the power plant entering service in December 2014…[but it] still needs an air permit from environmental regulators and the Department of Energy…"


BIG WIND FUNDED
Terra-Gen Power Annouces Closing of $390 Million Construction Financing for Alta Wind I
24 March 2010 (PR-USA.NET)

"Terra-Gen Power, LLC ("Terra-Gen") has closed a $394 million financing for its 150 megawatt ("MW") Alta Wind I project located in Tehachapi, California. The financing includes a seven-year construction and term loan, a bridge loan to the ITC cash grant from the US Department of Energy, and ancillary credit facilities. The proceeds of this financing will be used to complete construction of the 150MW project, which utilizes GE 1.5 SLE wind turbine generators, and to repay the pre-construction financing…


"Credit Agricole CIB and Natixis, New York Branch acted as Co-Bookrunners and Co-Structuring Leads for the financing. The lender group also includes Union Bank N.A., Prudential Investment Management, Inc., Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. ("Rabobank Nederland"), and Banco Santander S.A…"

Wind turbines in the Tehachapi Mountains where Terra-Gen will build Alta I. (click to enlarge)

"The Alta Wind I project represents the first phase in the development of the Alta Wind Energy Center, a 3,000 MW initiative and one of the largest wind development projects in the United States. The Alta Wind Energy Center is underpinned by a 1,550 MW power purchase agreement ("PPA") to sell clean, renewable energy to Southern California Edison ("SCE"). Alta Wind I will be constructed by a joint venture between Wind Energy Constructors and Balfour Beatty and will begin delivering energy to SCE in early 2011. Alta Wind I will be the first project to interconnect to and utilize SCE's Tehachapi Renewable Transmission Project…

"Alta Wind I is owned by California Highwind Power, a subsidiary of Terra-Gen. Terra-Gen, owned by affiliates of ArcLight Capital Partners, LLC ("ArcLight") and Global Infrastructure Partners ("GIP"), is a United States-based leading renewable power generation company…"


THE BETTER PLACE BET
Will Better Place Make It?;A look at the dollars, cents and psychology behind the electric car guys
Michael Kanellos, March 22, 2010 (Greentech Media)

"…Driving a gas car costs about 12 cents a mile when gas costs $3 a gallon, says Jason Wolf, vice president the [Beter Place] North American division…Electricity, on the other hand, costs about 3 cents a mile: a kilowatt hour costs around 12 cents and a car can go around 4 miles on a kilowatt hour. A battery for an electric car, meanwhile, will cost around 6 cents a mile over a 200,000 mile lifetime.

"Since Better Place says it will supply the electricity and batteries to consumers, the company has a margin of 3 cents per mile (12 cents minus 9) before potential customers complain about the higher cost of going electric…[With the 3 cents] Better Place proposes building thousands of charging stations, hundreds of battery swapping stations, and devising software so these cars won't crash the grid when charging…There are around 200 million drivers and 254 million vehicles in the U.S. and insurance companies say the average person drives 12,000 miles a year. That comes to 2.4 trillion miles, or $72 billion of potential three-cent transactions per year. Even one percent of that would probably placate investors. And in Europe and Asia, higher gas prices boost that 3 cent margin to 9 or 12 cents. Additional revenue can come from selling semi-depleted batteries to utilities…"

A Better Place fast-switch battery-switching station. (click to enlarge)

"And with the battery separated from the car, the down payment and resistance toward going electric goes way down…In a short period of time, [Better Place] has joined the ranks of Google, Apple, Microsoft and Tesla Motors as a subject of endless debate and speculation. How did they raise over $700 million? How much have they spent? Will car dealers and manufacturers work with them?

"…[There] appear to be five big hurdles the company will have to overcome…Consumers will buy electric cars, but not the battery. Better Place will build charging networks and then charge consumers subscription fees that cover the cost of the car's battery, the electricity to run them, and ancillary services like smart charging software and charging station maps… 2.1 charging stations per car…Since the battery accounts for about one-third of the cost of an electric car, the sticker price will be far lower than competing cars sold with batteries…[Better Place] will also offer discount entertainment packages, insurance and other services."

Common driving habits mean most charging will take place at home. (click to enlarge)

"…[T]he Better Place hurdles…[1] Fear, Uncertainly and Doubt…[are] perhaps the largest looming barrier. It's just plain weird to buy a car but lease the most expensive component…[Consumers] will have legitimate questions…[2] Swapping…Consumers don't have to worry about their battery degrading…Better Place will circulate newer, longer-lasting batteries into the fleet….[B]atteries will decline in price…Better Place's battery expenses drop to 3 cents a mile and the gross margin doubles to 6 cents. The company can then add to its margins by selling the semi-depleted battery packs to utilities for grid balancing…

"…[3] The battery is one-third of the price of an electric car…[so] car manufacturers only get to sell two-thirds of a car, leaving them…[less] profit…On the other hand, fleet sales… are drawing customers, which car makers won't want to miss out on…[4] Technically, you will need to install a charger for safety reasons, but it's essentially the same outlet [as the 240-volt home dryer socket]…Your first electric car will likely be a commuter car, plowing less than 40 miles a day…If you drive 12,000 miles a year like the average American, your electricity costs come to $360 a year, or $36 a month. And if you charge at off-peak hours like the utilities will urge you to, the monthly costs drop to $24…[5] Better Place often analogizes the service to the cell phone industry. In the early days, cell phone equipment was expensive…Now, phones go worldwide and the infrastructure costs have dropped…Still, the prices of cell phone equipment and Better Place equipment aren't remotely [the same]…Then again, with a leased battery, electronics are someone else's problem…So it could work."